What are some of the challenges to using a managed care approach in mental health care?

Answer 1

There are at least two significantly different types of managed care:

1. Case manager assesses unique needs of the client, refers client to the best possible services, monitors progress, and makes sure all the client's needs are met.

2. The usual notion of managed care: Services are only available from the lowest bidder who gets a flat payment regardless of how much service is needed or furnished.

Managed care uses capitation and related finance mechanisms to effectively put health care providers in the insurance business. Capitated providers get a monthly payment regardless of whether they provide services. Just as fee-for-service and traditional insurance encourages providers to furnish services that are not necessary, even if they may prove harmful (e.g. hysterectomies in the 1950s), capitation encourages providers to avoid furnishing services, even if it is harmful to clients.

Large insurers are more efficient, at managing risk, than small insurers. This is true because when they write large numbers of policies their loss ratios more and more closely approximate the true loss ratio for the population of policyholders. This is a trivial consequence of the law of Large Numbers and the Central Limit Theorem.

When providers accept insurance risks from managed care organizations and insurers, they are much smaller, much less efficient insurers. to compensate for this inefficiency providers are compelled to reduce average service levels or face excessive risk of poor financial outcomes. Since they do not really see themselves as insurers and certainly do not acknowledge this role to clients, providers are in an excellent position to deny legitimate requests for service.

"Professional Caregiver Insurance Risk" explains the math and the consequences of provider insurance risk assumption on providers, consumers, and the health care system as a whole.

References

Cox, T.(2010). Legal and Ethical Implications of Health Care Provider Insurance Risk Assumption. JONA'S Healthcare Law, Ethics, and Regulation, 12(4): 106-116.

Cox, T. (2009). Commentary: A Common Flaw in Health Care Finance Mechanisms That Adversely Affects Service Quality and Capacity: Professional Caregiver Insurance Risk In The Trenches. Journal of Psychiatric Mental Health Nursing, 16:938-940.

Cox, T. (2006). Professional caregiver insurance risk: A brief primer for nurse executives and decision-makers. Nurse Leader, 4(2): 48-51.

Cox, T. (2001). Risk theory, reinsurance, and capitation. Issues in Interdisciplinary Care, 3(3): 213-218.

Answer 2

When care is managed to maximize profit to the provider, case managers are under pressure to minimize care to patients. This tends to reduce treatment options, medication choices, numbers of physician visits, choice of caretakers, and so forth.